How music and cryptocurrency have more in common than you think
While on a flight to Taipei I was watching The Defiant Ones again. For those who haven’t seen it, this is the four part documentary on Jimmy Iovine and Dr. Dre, the music icons and creators of Beats By Dre (sold to Apple for $3 Billion). In one section Jimmy starts talking about realising the music business was in trouble once he saw how easily people were trading MP3s on websites and then through services like Napster.
That got me thinking that we often draws parallels of blockchain/cryptocurrency to the beginning of the Internet. But not enough is made of its similarities to the music business, which I think is far more fascinating. Let’s go through some:
Control
Around the year 2000, when music was at its absolutes sales peak, there were four major record labels. Those four had sub-labels underneath that they also partly owned. So even though the public thought there were hundreds of labels and they were supporting entrepreneur driven labels like Maverick, Interscope, Bad Boy, etc; the money was rolling up to those four and the labels were under their control.
Probably the biggest benefit that everyone likes about cryptocurrency is that it frees up control from centralised parties. Poorer countries are angry their governments can de-value their currencies and keep printing more.
Denial and Attacks
During The Defiant Ones, Jimmy goes to Doug Morris (head of one of the big four labels, Universal) and tells him what’s going on with MP3s and that their business is over. Doug Morris is an experienced music mogul who has done well from their existing business model. Doug, assuming their cartel-like model can ever be brought down, just dismisses it. Then Jimmy and the rest of the music industry go on the attack that it’s theft and piracy and begin bashing the very fans that made them super wealthy.
This is comparable to the current parties in control of the financial world saying cryptocurrencies are a scam, are used for illegal activities and painting a negative brushstroke over the community.
(Ironically, a lot of the music artists didn’t care too much that their music was now free. The reason being record labels made the vast majority of the money from record sales and artists made their money in live performances the label had no rights over.)
New Products and Business Models
Once anti-piracy messages and pleas from groups like Metallica failed to resonate, people began building new products for the music business. The ringtone era exploded at one point and allowed artists to monetise their songs. Streaming services have become the norm with multiple companies becoming publicly listed. Live events for concerts and electronic music festivals are at new highs as people want that different experience. EDM may never have become mainstream unless it was easy for people to hear the music and remixes of their favourite pop and hip-hop records.
Over the past two years the growth of Bitcoin and Ether have allowed for new business models to start building which cover everything from investment platforms to infrastructure technologies and a better form of the Internet.
So what does all this tell us? It says that no matter what the powers in control do or say, people will continue to use products that make their lives easier, this is whether its a MP3 or cryptocurrency. And more the higher ups bash and fight against it, people’s natural tendencies is to rebel and keep pushing forward. The ones in financial control should learn from Jimmy when he said “I don’t want to be the guy who sold the last CD”.